LME copper stockpiles jump the most in four years on Antwerp

Copper stockpiles in warehouses monitored by the London Metal Exchange jumped the most in four years after deliveries of the metal into Antwerp, Belgium, helping send prices to a seven-week low.

Copper inventories rose 9.4 percent to 240,450 metric tons, the biggest jump since Sept. 5, 2008, with 21,300 tons shipped into Antwerp, data from the bourse showed today. Stockpiles in the Belgian city are the highest since Feb. 11, 2000, the data showed. Lead and zinc inventories in Antwerp surged to the highest level since at least 1994, according to the data.

The copper delivery to Antwerp “has hurt sentiment, highlighting the apparent abundance of refined units and current levels of weak demand,” Leon Westgate, an analyst at Standard Bank Plc said in a report today. “The key will be whether today’s inflow was a one-off, or the start of a trend. If it is the latter, it may well be bearish for prices, but ultimately bullish for premiums.”

Copper for three-month delivery dropped as much as 1.6 percent to $7,698 a ton on the London Metal Exchange, the lowest level since Sept. 7. The LME has more than 600 registered warehouses in locations from Singapore to the U.S. that are intended to ensure metal deliveries against futures.

The copper was likely diverted to Antwerp from China and is probably “tightly held,” Westgate wrote. It may end up getting stuck in queues that are already affecting other LME warehouses, thus ultimately reducing availability in the market, he said.

Copper Consumers

“It will be interesting to see how the situation evolves should copper consumers, concerned about the global economy, look to take less metal on long-term contract next year and decide to take more exposure to the spot premium market,” Westgate wrote.

Buyers in Singapore are paying a premium for zinc of $110 a ton, the most in at least 10 years, and a $95-a-ton premium for lead, more than twice the average over the past decade, Metal Bulletin data on Bloomberg show. The premiums are added to the price of metal on the LME.

Antwerp has 59 warehouses authorized by the LME to store metals. Removing metal earmarked for delivery there may take as long as 57 days, Bloomberg calculations show. The wait for metal in Detroit is 48 weeks, and 57 weeks in Vlissingen, the calculations show.

“It’s a continuation of the trend that we’ve seen in terms of metal going in over the past few months” into Antwerp, Gayle Berry, an analyst at Barclays Plc. in London, said by phone today. “It’s becoming similar to some other locations whereby queues are beginning to form for some of the metals.”